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April 24, 2012updated 13 Apr 2017 8:45am

US life insurers in good shape despite tough environment, reports Moody’s

US life insurers results in Q4 of 2011 continued to reflect a tough environment, says Ann Perry, a vice-president at Moodys Investor services. She notes that US life insurers overall reported modest improvements in operating profit and net income in 2011 but that in the fourth quarter net income came in slightly lower than in the same period in 2010.

By LII editorial

US life insurers’ results in Q4 of 2011 continued to reflect a tough environment, says Ann Perry, a vice-president at Moody’s Investor services.

“The sluggish economy, high equity market volatility and low interest rates continued to constrain life insurers’ earnings in 2011,” says Perry.

She notes that US life insurers overall reported modest improvements in operating profit and net income in 2011 but that in the fourth quarter net income came in slightly lower than in the same period in 2010.

On a positive note, Perry says credit impairments across the life industry fell from $5.5bn in 2010 to $5.2bn in 2011.

Excluding Aflac, which incurred a significant impairments related to its investment portfolio, industry impairments as a percentage of cash and invested assets declined further, to 17 basis points from 29 basis points in 2010.

She adds that life insurers’ impairments on their European investments are expected to be modest, given their limited exposure to troubled banks and sovereign debt.

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